Choosing Crypto As A Form of Investment
Before considering investing in anything a complex amount of research is absolutely necessary. I mean you wouldn’t go out and buy a car or a house without doing your due diligence. Right?
As simple as this sounds most people fail right out of the gate. Do you know how many times I’ve heard of people buying crypto because they saw it on CNBC? Or they knew someone who put money into Doge….
Come on people.
Ok. First and foremost think of each crypto you come across as something that is trying to solve a real world problem. Your job is to find out what problem each asset you’re considering investing in is trying to accomplish.
Let’s take XRP for example. One of my favorite digital assets.
What does XRP do? Well here I’ll explain with a caveat.
Banks all over the world transfer money from one to another. They currently utilize what you would call “nostro vostro” accounts. Which is how they essentially hold money for each other. So for example if I were a bank in the US and I wanted to send money to a bank in Mexico. I would utilize the aforementioned accounts to fund a money transfer.
The bank in the US sends the bank in Mexico a message saying I’m sending $1M dollars. The bank in Mexico receives the message debits the money from the US account that already exists there. The funds are then distributed appropriately and the transfer is complete.
Are you still with me? If not go back and read that a few times.. :)
The problem with this antiquated system is that it is slow usually taking 3-5 days to complete, expensive and isn’t very transparent. Also it ties up very LARGE amounts of money that have to exist in these “nostro vostro” accounts globally. Some estimate over $27 Trillion dollars.
So how does XRP fit into all of this? Well it frees up that money that is tied up and utilizes itself to facilitate the money transfers. XRP itself actually represents the value within the transaction. So lets say that same US bank wants to send $1M dollars to that bank in Mexico. If the banks utilize XRP there is no need to have actual money parked for each other.
The value that is being transferred is being represented by XRP.
I.E. At the time of this article each XRP is worth $1 USD.
So a bank wanting to send $1M USD utilizing XRP - would have to send 1 million XRP.
The most important part in all this is the xrp would be sent on the XRP Ledger- it would only take 3 secs not 3-5 days.
Not cost 100’s of thousands of dollars to send (depending on the amount you’re sending because it can definitely cost more)
Lastly the transaction would be 100% transparent and that $27 trillion dollars would be freed up for lending and other products that would actually help the economy instead of being tied up in banks all over the world and not being used at all
Now thats what I call a Use Case.
So hopefully that is a clear picture of what XRP’s current use case is but keep in mind -not limited to. So now all it comes down to is what projects you’re interested in.
Cardano, ethereum, Solana, chainlink?
Aggregate information. Cross reference with multiple sources for accuracy. Then apply that data to whatever your goal is. That is a simple formula that can be applied to subject that I’ve been utilizing for years.
Well I hope that gives you a clear picture on what XRP’s use case is and maybe will encourage you to research it further. But most of all I hope this helped you to realize that you need to research what you want to invest in. I can recite all the use cases of the assets I’m invested in because not only was I infatuated with the projects. I realized that if I were able to explain them to other potential entrants.
They might become intrigued enough to explore them on their own.
Thats what we want as a community!
Happy hunting.
JK
